Business strategy is the set of decisions that defines what your business aims to achieve, how you will outperform your competition, and what you will stop doing. Strategic thinking is the ability to view your market as a game with players, rules, and moves, and to anticipate the next move.
This guide is your introduction to a series on strategy for small and medium-sized businesses. Here are the basic concepts and a method to get started today. Then you can delve deeper into What is strategy?, in strategic models and in the tactic.
What is strategic thinking in business?
Thinking strategically means making decisions today while considering how others will react tomorrow.
The word "strategy" comes from Greek strategists, the general who led the army. For centuries, it was a military and political issue. Today, it is studied in business administration, marketing, and sales because the underlying problem is the same: you have limited resources, a goal, and other players who are after the same thing as you.
In practice, an SME that thinks strategically asks itself questions before taking action:
- What exactly do I want to achieve, and by when?
- Who else is active in my market, and what do they want?
- If I lower my price, what will my competitors do? And what about my current customers?
- What is it about me that others find hard to copy?
Why View Your Business as a Game?
Because it is, in a very specific sense. In 1944, mathematician John von Neumann and economist Oskar Morgenstern published Theory of Games and Economic Behavior (Princeton University Press), the work that laid the foundation for game theory: the study of decisions in which your outcome also depends on what others do.
Many people believe that success depends on being smarter or working longer hours. Both of these things help, but they aren’t enough. You’ve surely met highly capable people who’ve been stuck in a rut for years and others with average talents who’ve built solid companies. A common difference is that the latter understand the rules of the game they’re playing and choose wisely where to focus their efforts.
The good news: that's something you can learn.
The Five Elements of Any Business Game
In his book Co-opetition (1996), Professors Adam Brandenburger and Barry Nalebuff proposed that every business game has five elements, known by the acronym PARTS. Changing any one of them changes the game:
- Players: customers, suppliers, competitors, and complementary businesses (those that make your product more valuable, such as the auto parts store for the auto repair shop).
- Added value: what you bring to the table and what would be lost if you weren't here.
- Rules: laws, contracts, industry standards, and market practices.
- Tactics: how you influence other players' perceptions.
- Scope: the boundaries of the game, which you can expand or reduce (for example, by entering another city or forming an alliance with another business).
The central idea put forward by these authors is powerful for an SME: business isn't just a battle. You cooperate with others to make the pie bigger, and you compete to decide how it's divided. A price war, for example, usually leaves everyone involved worse off.
Ethical Strategy: Why Playing Fair Is the Smart Move
There are books on “the business game” that suggest setting morality aside in order to win. That’s bad advice, even from a strategic standpoint.
Your business isn't playing a single game. It plays every day with the same customers, suppliers, employees, and competitors. In a game that repeats itself, reputation is part of the score: a customer who’s been deceived won’t come back, will leave a review on Google, will tell their WhatsApp group about it, and could cost you a lawsuit filed with Profeco. A supplier who’s been mistreated will stop extending credit to you. An employee who sees cheating will learn to do the same.
Playing fair doesn't mean playing soft. It means competing with better offers, better service, and better decisions—all within the rules—and delivering on your promises. In the long run, that's the advantage that's hardest to copy.
Strategy, Models, and Tactics: The Three Levels of the Game
To avoid confusion, it is best to distinguish between three levels. Each one has its own article in this series:
| Level | Question answered | Example from an SME |
|---|---|---|
| Strategy | What is my goal, and what resources do I have to achieve it? | To become the preferred packaging supplier for bakeries in Monterrey within two years. |
| Strategic Models | What kind of overall strategy is best for me, given my situation? | Target a niche that the big players overlook, rather than competing head-on. |
| Tactics | What specific actions will I take this week? | Visits to 20 bakeries, a first-order promotion, and follow-up via WhatsApp. |
Signs That Your Small Business Is Operating Without a Strategy
- You accept any client who comes your way, even if they leave you with little profit or a lot of stress.
- Lower prices whenever a competitor does.
- You switch agencies, social media platforms, or promotional strategies every few months without measuring what worked.
- Your team can't explain in one sentence why a customer should choose you.
- Important decisions depend on how I feel that day, not on a written goal.
If you identified with two or more, it's not a lack of effort—it's a lack of a game plan.
A strategy without tactics remains on the whiteboard. Tactics without a strategy are aimless activity: lots of publications, lots of ads, and few customers.
The essence of strategy: choosing what not to do
Michael Porter, a Harvard professor, wrote in his article “What Is Strategy?” (Harvard Business Review, (, 1996) that the strategy consists of making concessions, and that its essence lies in choosing what not to do.
For an SME, this is gold. You can’t sell to everyone, be on every social media platform, or offer every service. Every “yes” to a client who doesn’t fit your profile takes time away from those who do. A clear strategy gives you permission to say “no” without feeling guilty.
How to Start Thinking Strategically About Your Small Business: 6 Steps
- Set a measurable goal. Not “to grow,” but “to increase the number of repeat customers from 8 to 15 in 12 months.”.
- Draw the board. Make a list of your customers, suppliers, competitors, and complementary businesses. Write down what each one wants.
- Identify your added value. Ask your best customers why they chose you. Their answer is worth more than your opinion.
- Decide what you're not going to do. Eliminate a service, a channel, or a type of customer that consumes resources but does not generate profit.
- Anticipate reactions. Before making any major move (raising prices, launching a promotion), think about how your customers and competitors will react.
- Execute, measure, and adjust. Review your lead, sales, and repeat purchase numbers every month. Strategy is refined with data, not hunches.
If your goal is to attract more customers, the next natural step is to turn that strategy into a plan for digital marketing that you can measure.
What Musashi Teaches an Entrepreneur
Miyamoto Musashi, the Japanese swordsman, wrote The Book of the Five Rings between 1643 and 1645. In *The Book of Earth*, as translated into English by Victor Harris, it states that once you have attained the Way of Strategy, there is not a single thing you cannot see.
“When you attain the Way of Strategy, there will not be a single thing you cannot see.” Miyamoto Musashi, The Book of the Five Rings, Book of the Earth.
The lesson for your business: Strategy isn't just another technique—it's a way of looking at things. When you master it, pricing, campaigns, and hiring are no longer isolated decisions but become part of a single plan.
Your Next Step
Choose one of the 6 steps and do it this week. If you'd like a second opinion on your board and your goal, schedule a free diagnosis and we'll go over it with you.
Frequently Asked Questions
What is business strategy in simple terms?
It means deciding where your business is headed, which customers you’ll serve, how you’ll win them over against your competition, and what you won’t do. This translates into clear priorities for making the most of your money, your time, and your team. Without a strategy, every decision is made in isolation, and resources are scattered.
What is strategic thinking?
It is the ability to analyze a situation as if it were a game with players, rules, and possible moves; to anticipate how others will respond; and to choose the move that brings you closer to your goal. It is practiced by asking questions before acting, evaluating results, and reviewing past decisions to learn from them.
What is the difference between strategy and tactics?
Strategy defines the goal and the overall path: who you’re selling to and how you’re going to succeed. Tactics are the specific actions taken to follow that path: a campaign, a promotion, a sales script. Strategy is reviewed annually or quarterly; tactics are adjusted weekly based on results.
Does thinking of business as a game mean playing dirty?
No. A business is a game that plays out every day with the same customers, suppliers, and competitors, and reputation is part of the score. Cheating may yield a quick profit, but it closes doors, leads to bad reviews, and creates legal risks. The most profitable long-term strategy is usually the one that creates value for everyone.
Where do I start when developing a strategy for my small business?
Start by setting a measurable goal for the next 12 months, identifying your best customers, and understanding what sets you apart. Then decide what you’re going to stop doing so you can focus your resources. Once you’ve clarified that, choose your tactics and measure your results. If you get stuck, an external assessment can help you see what you might not notice from the inside.
